Hyundai Details Plan to split off luxury cars in dealerships

Before the Hyundai Genesis arrived in showrooms, there was talk of the car launching under the aegis of its own brand, much like the debut of the Lexus LS400 back in 1990. That didn't happen, and premium Hyundai models like the Genesis and the forthcoming 2010 Equus share floor space with Accents and Tucsons.


Dave Zuchowski, Hyundai's North American sales vice president, has drawn parallels to Toyota's co-locating efforts with its Scion sub-brand in a letter to dealers, laying out the plans for incorporating the Equus into showrooms. "This strategy will create physical and psychological separation in the Hyundai showroom," says Zuchowski, while dealers remain less convinced that this means anything more for them than increased costs. On the retail end, stores will be required to purchase several kits for showroom, service, and parts support of the Equus. While not as expensive as a full-blown new store would be, dealers still might have trouble mustering enthusiasm for hundreds of thousands of dollars in corporate-ordered directives that franchisees may have to comply with.


Still, the thought of a roped-off premium car department has a certain pull. "Sectioning off the brand, that's the Holy Grail," said Hyundai Motors USA CEO John Krafcik to Ward's Auto. What Krafcik and his Korean masters may have up their collective sleeve is a way to get some of the desired differentiation without the massive costs a new brand launch would entail.


Dealer unhappiness aside, Zuchowski lays out Hyundai's strategy clearly. "We intend to use the launch of the new Equus to develop and further establish Hyundai as a legitimate force in the premium-luxury segments;" intimating there might be more to it than just the Genesis models and the luxo-liner Equus – a "Genesised-up" Santa Fe might do battle against the Lexus RX, for instance. While it will cost dealers money, Zuchowski notes that ultimately, it's the cheapest way to go while "still providing an enhanced dealership environment...that will devliver a substantial incremental profit opportunity with very reasonable dealer investment." In other words, pay the man now, and cash in later, if all goes well.
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